COVER STORY: AWB biggest scandal to hit the Howard Government

The Government should not escape taking some responsibility for the AWB fiasco.

The Howard Government has been strangely and dangerously complacent about the political fallout from the AWB affair.

All last year senior ministers from the Prime Minister down staunchly defended AWB executives and backed its claims that no bribes were paid and that the company was unaware of any possible breaches of United Nations sanctions against Iraq.

But this does not let the Government off the hook.

Mr Howard, Mr Downer and Trade Minister Mark Vaile must answer why their officials did not make vigorous efforts to make sure there were no bribes being paid, or if any payments were going directly to Saddam Hussein's régime rather than to the Iraqi people.

The onus was on the Government to ensure that Australia's dealings with Iraq were above board, particularly after it was warned as far back as 1999 that there was something dodgy about AWB's dealings with Iraq.

Almost fell through

On the eve of the war with Iraq, one AWB deal which almost fell through was settled at the last minute on terms even more favourable to AWB than before, and yet the Government would have us believe it did not ask AWB how it achieved this coup.

Labor has vowed to pursue the Government for the rest of the year if necessary to find out what it knew and what actions, if any, it took about the bribes.

Where it will end up is still far from known, but there is little doubt that the AWB kickbacks scam to Saddam Hussein is the biggest scandal to hit the Howard Government since it won office in 1996.

Complacency within the Government about the Cole Inquiry may have been attributed to the fact that it is confident there will be no "paper trail" leading to Department of Foreign Affairs and Trade (DFAT) officials and Government ministers.

Perhaps the Government thought that it might get mauled by the hearings, but that it could simply tough it out as it has with other scandals.

However, the AWB matter is far more serious than previous ministerial skirmishes because it hits the Government on so many levels: Coalition unity, its relationships with agriculture lobbies, its friendship with countries such as the US and Canada, its international reputation as an honest trader, its justification for the war in Iraq, and its free trade agenda.

But the fact that Deputy Prime Minister Mark Vaile has been named in meetings with kickback officials suggests the Government is simply determined to "tough it out".

However, whatever the outcome for the Government, the long-term ramifications are huge.

Some 45,000 wheat farmers have been tainted by the affair and, more seriously, their livelihoods are at stake from future wheat deals and, for a large number of them, their shareholdings in the now disgraced AWB.

The Government will reconsider the single-desk monopoly but, even if it decides to keep it, there must be serious doubts about whether AWB will run it.

The dirty dealings by AWB executives, and its culture of kickbacks and bribes, are also a massive blow to the Government's free trade rhetoric.

In fact, it could be said that, while AWB's credibility is shot and DFAT's and the Government's has been tarnished, the champions of free trade have been dealt the heaviest hit of all.

Kickbacks

AWB executives have argued in the inquiry that kickbacks have been part of doing business for decades, and Australia's foreign competitors are happy to take advantage of the exposure of AWB for their own commercial advantage.

Even leaving these issues aside, the AWB scandal is far more serious than, say, whether Government ministers exaggerated about asylum-seekers throwing children into the water, and failing to correct the claims when Navy officials told them the claims were untrue.

The Howard Government took Australia to war against Iraq on the pretext that Saddam Hussein had weapons of mass destruction, and then switched the rhetoric, when it suited, to lambasting the "régime".

It was beholden on it to ensure that AWB (which enjoys a unique government monopoly on overseas wheat sales) was not giving that same régime under-the-counter bribes to win contracts.

It is not good enough to pass all the blame onto AWB - that its officials were wittingly or unwittingly guilty of paying bribes to Saddam Hussein.

Sometimes the buck-passing and blame-shifting have to stop, and the Government has to take responsibility.